Jobless rate tops 10% in S.D. County

Dean Calbreath

For the first time since the early 1980s, San Diego County's unemployment rate surged above the 10 percent mark last month, according to state data released yesterday.

Though there were some glimmers of hope in the employment numbers – including a pickup in hiring in the long-beleaguered real estate and construction industries – there were not enough jobs to keep pace with new entrants to the market.

With a wave of high school and college graduates looking for summertime work, the number of jobless rose by 8,000, pushing the unemployment rate from 9.6 percent in May to 10.1 percent in June – its highest level since the recession of 1982-83.

“We may be starting to skate along the bottom, but we're not able to take care of any new job seekers,” said Marney Cox, economist with the San Diego Association of Governments.

The seasonally adjusted California unemployment rate remained unchanged between May and June at 11.6 percent. Without the adjustment, the unemployment rate in the state – which lost 66,500 jobs – would have jumped from 11.3 percent in May to 11.6 percent last month.

Cox predicted the local jobless rate will climb through July and August but could soften in September, as the economic decline nears bottom and students return to school.

Alan Gin, economist at the University of San Diego, said the local jobless rate could hit 11 percent or 12 percent before it begins to decline next year.

“I don't see a lot of signs of a turnaround,” Gin said.

Hiring was virtually flat in San Diego County in June, with the total number of workers on payrolls throughout the county ending the month at the same number as it began.

There was a burst of summertime hiring at hotels, restaurants, casinos and amusement parks as businesses geared up for tourists. That was offset by layoffs of temporary workers and government employees.

Perhaps the most positive sign in the Employment Development Department's data was that hiring has begun to inch up in the real estate and construction industries – ground zero for the crisis that has gripped the economy. Although both industries remain well below where they were at the height of the housing boom in 2005, they are beginning to show steadier growth.

Real estate firms added 200 workers, the third straight month for hiring gains, as home sales began to pick up. Real estate sales climbed 14 percent between May and June, according to MDA DataQuick, a real estate information firm in La Jolla.

“You can't read too much into month-to-month numbers, but there's some pickup on the sales side, which could explain some minor hiring,” said Gary London, who heads The London Group Realty Advisors in San Diego.

“Sales rates are starting to approach 60 (percent) or 70 percent of the normal rate for long-term trends, although most of those are foreclosures. We're still a long way from getting back to normal,” London said.

Construction companies hired 400 new workers last month – the second month in a row for hiring gains – which was partly because of money from the federal stimulus package funding local infrastructure projects.

“The federal stimulus will help stabilize the job market, but it will take a while to see its effects, and some of the effects will be hard to see, since a lot of the stimulus consists of tax cuts,” Gin said.

Stimulus Tracker, a report by Mayor Jerry Sanders that monitors local stimulus spending, lists 1,400 jobs being created to extend state Route 905 and 3,200 summer jobs targeted toward teenagers. Other stimulus jobs are being created through military construction projects at Camp Pendleton and Miramar Marine Corps Air Station.

Some school districts and other agencies are waiting until after the state budget is passed before they decide how to spend the stimulus money.

However, the good news from the real estate sector was offset by the loss of 800 professional jobs and a sharp slowdown in health care hiring, which has been one of the most reliable engines for job growth in the county. Only 100 new health care jobs were created last month, compared with 300 the month before.

Several economists said that if it weren't for the seasonal influx of new workers looking for jobs, the unemployment rate would not have risen. Beacon Economics in Los Angeles, which calculates seasonal adjustments for California counties, estimates that if the San Diego rate were seasonally adjusted, it would have been 9.7 percent – the same level that Beacon estimated for May.

That would equal the seasonally adjusted national unemployment rate.

Beacon says the latest data show that the pace of economic decline is slowing and the job market is “no longer in a free fall.”

But Stephen Levy, director of the Center for Continuing Study of the California Economy in Palo Alto, warned not to read too much into the month-to-month movement of the unemployment rate.

“June was a terrible month for the state economy,” Levy said. “California has trailed the national economy during the past year with job losses continuing to exceed the national average.”

On the other hand, the list of states that are performing worse than California continues to grow. Five states now have worse jobless rates: Michigan, 15.2 percent; Rhode Island, 12.4 percent; Oregon, 12.2 percent; South Carolina, 12.1 percent; and Nevada, 12 percent. Six other states also have double-digit unemployment.

“The recovery rate of California and other states depends on the strength and speed of the federal stimulus package and the pace of worldwide economic recovery,” Levy said. “There are some positive signs in home-resale activity, corporate profits and the banking sector. But the ultimate test of recovery is job growth, and today's (unemployment) news says job growth is still a future hope but not a reality yet,” Levy said.